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3M Reports Strong First Half As Home Improvement Sales Rise

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3M (NYSE: MMM) today reported second-quarter 2021 results and updated its 2021 full-year outlook.

Second-Quarter Highlights:

- Sales of $8.9 billion, up 24.7 percent year-on-year
- Organic local-currency sales increased 21.4 percent year-on-year
- Both GAAP and adjusted earnings per share of $2.59
- Operating cash flow of $1.9 billion; adjusted free cash flow of $1.6 billion, up 2 percent year-on-year
- Returned $1.4 billion to shareholders via dividends and gross share repurchases
- Updated full-year 2021 outlook: Earnings per share of $9.70 to $10.10 vs. $9.20 to $9.70, previously

"3M delivered strong performance in the second quarter, once again posting organic growth across all business groups and geographic areas, along with increased earnings and robust cash flow," said Mike Roman, 3M chairman and chief executive officer.

"In an uncertain economic environment, our team executed well and drove innovation across our businesses, while continuing to build for the future. Looking forward, we remain focused on investing in growth opportunities coming out of the pandemic, improving productivity, advancing sustainability and delivering differentiated value for our customers and shareholders."

Second-Quarter Results

Sales grew 24.7 percent year-on-year to $8.9 billion. Organic local-currency sales increased 21.4 percent while divestitures decreased sales by 0.7 percent. Foreign currency translation increased sales by 4.0 percent year-on-year.

Total sales grew 28.1 percent in Transportation and Electronics, 24.9 percent in Health Care, 22.4 percent in Safety and Industrial, and 20.4 percent in Consumer. Organic local-currency sales increased 24.2 percent in Transportation and Electronics, 23.2 percent in Health Care, 17.8 percent in Consumer, and 17.6 percent in Safety and Industrial.

On a geographic basis, total sales grew 28.7 percent in EMEA (Europe, Middle East and Africa), 26.1 percent in the Americas, and 20.2 percent in Asia Pacific. Organic local-currency sales grew 25.6 percent in the Americas, 20.1 percent in EMEA, and 15.4 percent in Asia Pacific.

Both second-quarter GAAP and adjusted earnings were $2.59 per share, resulting in year-on-year increases of 15 percent and 44 percent on a GAAP and adjusted-basis, respectively. Second quarter operating income was $2.0 billion with operating margins of 22.0 percent, as referenced in the "Supplemental Financial Information Non-GAAP Measures" section.

The company's operating cash flow was $1.9 billion with adjusted free cash flow of $1.6 billion contributing to adjusted free cash flow conversion of 103 percent. 3M returned $1.4 billion to shareholders in the second quarter of 2021, including $858 million in cash dividends and $503 million of gross share repurchases. See the "Supplemental Financial Information Non-GAAP Measures" section for applicable information.

Full-Year 2021 Outlook

Based on a strong first half of the year, 3M updated its guidance for full-year 2021. The company expects reported total sales growth of 7 to 10 percent with organic local-currency sales growth in the range of 6 to 9 percent. This compares to the company's prior expectations for total sales growth of 5 to 8 percent with organic local-currency growth of 3 to 6 percent. 3M now forecasts earnings in the range of $9.70 to $10.10 per share versus a prior expectation of $9.20 to $9.70. The company expects full-year free cash flow conversion to be in the range of 90 to 100 percent versus a previous range of 95 to 105 percent, as referenced in the "Supplemental Financial Information Non-GAAP Measures" section.

Second-Quarter Business Group Discussion

Safety and Industrial

  • Sales of $3.3 billion, up 22.4 percent in U.S. dollars. Organic local-currency sales increased 17.6 percent and foreign currency translation increased sales by 4.8 percent.
  • On an organic local-currency basis:
    • Sales increased in automotive aftermarket, roofing granules, abrasives, industrial adhesives and tapes, electrical markets, and closure and masking; sales declined in personal safety.
    • Sales grew across all geographic areas.
  • Segment operating income was $718 million, an increase of 15 percent year-on-year; operating margins of 22.1 percent.

Transportation and Electronics

  • Sales of $2.5 billion, up 28.1 percent in U.S. dollars. Organic local-currency sales increased 24.2 percent and foreign currency translation increased sales by 3.9 percent.
  • On an organic local-currency basis:
    • Sales increased in automotive and aerospace, commercial solutions, advanced materials, transportation safety, and electronics.
    • Sales grew across all geographic areas.
  • Segment operating income was $546 million, an increase of 52 percent year-on-year; operating margins of 22.0 percent.

Health Care

  • Sales of $2.3 billion, up 24.9 percent in U.S. dollars. Organic local-currency sales increased 23.2 percent, foreign currency translation increased sales by 4.3 percent and divestitures decreased sales by 2.6 percent.
  • On an organic local-currency basis:
    • Sales increased in oral care, food safety, medical solutions, separation and purification, and health information systems.
    • Sales grew across all geographic areas.
  • Segment operating income was $576 million, an increase of 92 percent year-on-year; operating margins were 25.3 percent.

Consumer

  • Sales of $1.5 billion, up 20.4 percent in U.S. dollars. Organic local-currency sales increased 17.8 percent and foreign currency translation increased sales by 2.6 percent.
  • On an organic local-currency basis:
    • Sales increased in stationery and office supplies, consumer health and safety, home improvement, and home care.
    • Sales grew across all geographic areas.
  • Segment operating income was $311 million, up 12 percent year-on-year; operating margins were 21.0 percent.

Source : 3M

Image : 3M

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30 July 2021

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